Toronto Star

Civil service pensions too generous, Tim Hudak says

Tories push for civil servants to have pension plans downgraded as Ontario struggles with a deficit and pension plans in shortfall

TARA WALTON
/ TORONTO STAR file photo

Propgressive Conservative Leader Tim Hudak, seen in October, says many Ontario taxpayers don’t even have workplace pension plans and yet are paying for “those with much more generous benefits."

By:Rob FergusonQueen’s Park Bureau, Published on Mon Nov 19 2012

Civil service pensions are too generous and leave taxpayers on the hook, Progressive Conservative Leader Tim Hudak said Monday in calling for their plans to be downgraded.

Setting the stage for a showdown with civil service unions, Hudak said government pensions for new employees should be changed to defined contribution plans, where the money staff and employers pay in determines the level of benefits.

That’s a change from the current defined benefit plans, where payouts are set in advance regardless of the pension plan’s financial situation — with low interest rates and poor stock market returns leaving many plans in a shortfall.

“It’s time the Ontario government adjusted its employee pension plans to the realities of low interest rates, longer life expectancy and demographic trends like the retirement of the baby boomers,” Hudak said in a discussion paper on retirement.

All such changes — including a look at whether pension plans can afford payouts based on a worker’s best five years of income — would be part of bargaining new contracts with unions representing civil servants.

Hudak noted many Ontario taxpayers don’t even have workplace pension plans and yet are paying for “those with much more generous benefits . . . we don’t think that’s fair.”

Given an estimated $100 billion shortfall in defined contribution plans, the government will have to look at lowering benefit levels, increasing employee contributions — or a combination of both — and restricting early retirements that see teachers and other public servants eligible for pensions in their late 50s, Hudak added.

Pension features like that are “no longer sustainable, we need to take action now,” he told reporters.

Hudak has already been pushing for the government to bring in an across-the-board wage freeze for all public servants as the government fights a $14.4-billion deficit.